Wellington, March 10 NZPA - Ports of Auckland reported a $3.3 million fall in half year net profit to $9.3 million as imported vehicle volumes dropped even as container volumes rose.

The result compares with a $12.6m net profit in the first half of 2007 which included a one-off $1.5m tax credit.

Managing director Jens Madsen today said trade volumes were weak in January and February, but had picked up slightly with the beginning of the export season in March.

"However, there is no doubt that the trading environment in New Zealand and abroad is extremely challenging, and will continue to be so in the foreseeable future," Mr Madsen said.

"It is difficult to accurately forecast forward volumes; however, we are encouraged by our recent market share gains and ability to reduce costs."

In the six months to the end of December 2008, container volumes at the port reached a record high of 455,083 TEU (20ft-equivalent units), up 6.4 percent on the corresponding period in 2007.

Container division ebit (earnings before interest and tax) was up 8.4 percent on a year earlier.

Mr Madsen said the company's overall result was significantly affected by imported vehicle volumes dropping 23.7 percent to 66,493 units. "The decline in vehicle imports reflects the significant global downturn this industry is experiencing, and a recovery is not forecast," he said.

General Wharves containers and break-bulk division ebit decreased 15.7 percent. General Wharves tonnage, excluding vehicle units, was down 3.1 percent to 767,694 tonnes.

Mr Madsen said a decision had been deferred on paying an interim dividend to 100 percent owner Auckland Regional Holdings.

The move was prudent as a capital structure review was under way.

The objectives of the review, which would be completed by the first quarter of next financial year, were to lock in longer term funding and ensure the company's dividend payout policy of 75 percent of net profit was appropriate, Mr Madsen said.

Measures to curtail costs included a freeze on executive salaries, while work was under way on a range of strategies to reduce unit cost and minimise potential job losses.

But Mr Madsen also said Ports of Auckland's current labour model put too much pressure on margins and it was critical costs were in line with forecast volumes.

Following a high level of capital investment in recent years, the company was well placed to manage future capacity demands.

Trans-shipment numbers were up 33.5 percent at the port, reflecting shipping line decisions to hub services off Auckland, using regional ports as feeder ports, Mr Madsen said.

He also referred to productivity improvements, with crane rate -- a key customer service measure -- up 9.4 percent and staff hours per container down 15 percent in December 2008, compared to 2007.

"We anticipate significant further improvements in crane rate and staff hours as the full benefits of new work practices, including dual-cycling, twin-lifting and two-way driving are realised," Mr Madsen said.

Port Operations ebitda (earnings before interest, tax, depreciation and amortisation) was $36.8m, down 0.6 percent compared to the same period last year. Including the impact of depreciation, Port Operations earnings before interest and tax were $26.2m, down 6.3 percent.

Ports of Auckland had a $105.5m current liability resulting from a decision not to roll over some existing debt facilities while the capital structure review was under way.

Debt levels at December 31 were $355.5m, similar to debt levels at June 30, 2008. Interest paid for the period was $14.4m compared to $13.5m.

Mr Madsen referred to moves by company NZL Group to try to set up a terminal at Port of Tauranga's Sulphur Point container terminal.

Yesterday NZL director Ken Harris put out a statement saying progress had been made in establishing the terms under which NZL could re-establish its container terminal.

But Port of Tauranga chief executive Mark Cairns said the parties had not made progress and the forum for resolving the issue was the High Court.

Today Mr Madsen said that as a future customer of NZL Group, he was pleased with the progress NZL was making with its plans to re-establish a container terminal at Port of Tauranga.

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